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FORECLOSURE
- MISSED MORTGAGE PAYMENT
Foreclosure
is the legal means that your
lender can use to repossess (take) your home.
When this happens, you must move out of your
house. If your property is worth less than the
total amount you owe on your mortgage loan, your
lender or HUD could seek a deficiency judgment. If
that happens, you not only lose your home, you
also would owe your lender or HUD an additional
debt - the difference in what you owe vs the
amount the home was sold for.
Foreclosure or a deficiency judgment could
seriously affect your ability to qualify for
credit in the future. So you should avoid it if
all possible!
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In the Event of a FORECLOSURE NOTICE
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Do not ignore the letters from your lender.
If you are having problems making your
payments, contact your lender immediately.
Explain your situation. Be prepared to provide
them with financial information, such as your
monthly income and expenses. Without this
information, they may not be able to help.
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Stay in your home for now. You may not
qualify for assistance if you abandon your
property.
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Contact a HUD-approved housing
counseling agency. They have information
on services and programs that could help you.
The housing counseling agency may also offer
credit counseling. These services are usually
free of charge.
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If you bought your home with a
Veterans Administration (VA) guaranteed loan,
call the VA office nearest you and see
RentLaw.com VETERAN'S
CENTER GUIDE
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FORECLOSURE ALTERNATIVES
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Special forbearance. Your lender may be
able to arrange a repayment plan based on your
financial situation. Your lender may even
provide for a temporary reduction or suspension
of your payments. You may qualify for this if
you have recently lost your job or your source
of income or if you had an unexpected increase
in living expenses. You must furnish information
to your lender to show that you would be able to
meet the requirements of the new payment plan.
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Mortgage modification. You may be able to
refinance the debt and/or extend the term of
your mortgage loan. This may help you catch up
by reducing the monthly payments to a more
affordable level. You may qualify if you have
recovered from a financial problem but your net
income is less than it was before the default
(your failure to pay).
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Partial claim. Your lender may be able to
work with you to obtain an interest-free loan
from HUD to bring your mortgage current.
You may qualify if:
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your loan is at least 4 months delinquent
but no more than 12 months delinquent;
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your mortgage is not in foreclosure; and
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you are able to begin making full mortgage
payments.
When your lender files a Partial claim, HUD
will pay your lender the amount necessary to bring
your mortgage current. You must execute a
promissory note, and a Lien will be placed on your
property until the promissory note is paid in
full. The promissory note is interest-free and
will be due if you sell or leave your property, or
when your mortgage matures.
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Pre-foreclosure sale. This will allow you
to sell your property and pay off your mortgage
loan to avoid foreclosure and damage to your
credit rating.
You may qualify if:
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the "as is" appraised value is
at least 70% of the amount you owe and the
sales price is 95% of the appraised value;
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the loan is at least 2 months delinquent
prior to the pre- foreclosure sale closing
date; and
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you are able to sell your house within 3
to 5 months (depending on what your lender
agrees to).
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An additional benefit to this
option is the assistance you will receive with the
Seller-paid closing costs. *Typical
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Deed-in-lieu of foreclosure. As a last
resort, you may be able to voluntarily
"give back" your property to the
lender. This won't save your house, but it will
help your chances of getting another mortgage
loan in the future.
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How do I know if I qualify for any of
these alternatives?
A housing counseling agency can help you
determine which, if any, of these options may meet
your needs. You should also discuss the situation
with your lender.
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Additional
Foreclosure Services include:
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